10-KPeriod: FY2017

PNC FINANCIAL SERVICES GROUP, INC. Annual Report, Year Ended Dec 31, 2017

Filed February 28, 2018For Securities:PNC

Summary

PNC Financial Services Group, Inc. reported strong financial performance for the year ended December 31, 2017, with net income increasing by 35% to $5.4 billion, or $10.36 per diluted common share, compared to $4.0 billion, or $7.30 per diluted common share, in 2016. This growth was driven by an 8% increase in total revenue, primarily from a 9% rise in net interest income and a 7% increase in noninterest income. The company also benefited significantly from the Tax Cuts and Jobs Act enacted in late 2017, which resulted in a substantial decrease in income tax expense and a lower effective tax rate for the year. The balance sheet remained strong, with total assets growing by 4% to $380.8 billion, driven by loan and deposit growth. Credit quality remained stable, with a decrease in nonperforming assets and net charge-offs compared to the prior year. PNC maintained a strong capital position, with its Transitional Basel III common equity Tier 1 capital ratio at 10.4% at year-end 2017. The company also returned capital to shareholders through share repurchases and increased dividends, demonstrating a commitment to shareholder value.

Financial Highlights

35 data points
Beta

Revenue

$16.33B

Net Income

$5.39B

33.0% Net Margin

EPS (Diluted)

$10.36

Total Assets

$380.77B

Cash & Equivalents

$5.25B

Free Cash Flow

$5.58B

Financial Statements
Beta
Revenue$16.33B
Interest Expense$1.71B
Net Income$5.39B
EPS (Basic)$10.49
EPS (Diluted)$10.36
Shares Outstanding (Basic)481.00M
Shares Outstanding (Diluted)486.00M

Key Highlights

  • 1Net income increased by 35% to $5.4 billion in 2017, driven by revenue growth and a significant benefit from tax reform.
  • 2Total revenue grew by 8% to $16.3 billion, with net interest income up 9% and noninterest income up 7%.
  • 3The effective income tax rate decreased significantly to 1.9% in 2017 from 24.1% in 2016, largely due to the Tax Cuts and Jobs Act.
  • 4Total assets increased by 4% to $380.8 billion, supported by loan growth of 5% and deposit growth of 3%.
  • 5Credit quality remained stable, with nonperforming assets down 14% and net charge-offs decreasing compared to 2016.
  • 6PNC maintained strong capital ratios, with the Transitional Basel III common equity Tier 1 capital ratio at 10.4% at year-end 2017.
  • 7The company returned $3.6 billion in capital to shareholders through dividends ($1.3 billion) and share repurchases ($2.3 billion) in 2017.

Frequently Asked Questions

PNC's net income increased by 35% in 2017, primarily driven by an 8% increase in total revenue, boosted by higher net interest income and noninterest income. A significant contributing factor was the benefit recognized from the Tax Cuts and Jobs Act, which substantially lowered the company's income tax expense.

PNC experienced solid growth in both loans and deposits. Total loans increased by 5% to $220.5 billion, with commercial lending showing particular strength. Total deposits grew by 3% to $265.1 billion, reflecting a shift towards relationship-based savings products.

PNC expects loan growth to be in the mid-single digits (percentage basis) for the full year 2018. Revenue is also projected to increase by mid-single digits, supported by expectations of accelerated U.S. economic growth, increased business investment, and consumer spending driven by tax cuts.

PNC's equity investment in BlackRock contributed positively to its financial results. Asset management noninterest income saw an increase, partly due to the flow-through impact of the federal tax legislation on this investment. BlackRock's earnings also directly contributed to PNC's reported earnings.